Versarien Share Discussion Threads

[jointer13] 25/10/2018 20:29

so if everyone put them "on order" and they had already loaned them out, surely they would have to be called in straight away...?

[haz101] 25/10/2018 20:26

Thanks for sharing chimp good advice

[jointer13] 25/10/2018 20:21

notice...As they are 'on order'

How to Prevent your Shares Holdings from being Shorted

Q.: Why does short selling reduce share prices?
Share

A: To short-sell a share speculators have to borrow the shares in the first place. Once they have done this they need to sell them in the market, and if this is done en-masse it can push the share price of a company down in the short term as there are more sellers than buyers in the market. Hedge funds specialising in short selling may also cause panic in the market by selling lots of shares in a company as other shareholders become worried about the share price plunge. Some companies will blame short sellers for dramatic declines in their stock price. The practice is so controversial that bans on short selling are not unknown and during the last credit crisis in 2008, traders were not allowed to short-sell certain banks and financial institutions.




Most borrowers and lenders of shares are institutions, brokers, etc. Mere mortals can borrow indirectly by using Spread Bets or Contracts for Difference. If you go short, you are effectively borrowing shares to sell for money; if you go long, you are effectively borrowing money to buy shares. Depending on the balance between shorts and longs, the company offering these products may choose to cover the risk by borrowing real shares to sell or by investing money to buy real shares.
Q.: What can you do to prevent your shares holdings from being shorted?
A: Now what can the average personal investor do to stop their own shares being shorted, as believe me your own broker, if approached, WILL sell your own shares that they hold on your behalf as a nominee account.

There are two things you can do, the first is to certificate them but this is not obviously to everyone’s advantage but the alternative solution is simple. All you do is to phone your broker and put an order in saying that you wish to place your shares for sale at, for arguments sake, double today’s price. As they are 'on order' they cannot be lent out by your broker and in turn you are reducing the amount of 'free shares' out there that can be used for shorting purposes. And don't forget to move your limit order up when the price starts to recover, then, that way your shares can't be shorted - not much but helps :D.

Although an individual personal investor will not normally have enough shares to halt a concerted shorting attack, if a large number of holders did this it would reduce the overall amount of shares that they could get their hands on.

In my opinion well worth doing if not only for the knowledge that your own shares cannot and will not be used in a short attack against the very share that you own

www.contracts-for-difference.com/Borrowing-lending-shares.htm

[lovat scout] 25/10/2018 20:19

Lucky

Stock lending is extremely big business. It’s not just to facilitate shorting but is used to keep the settlement system flowing smoothly as well as underpin all sorts of derivative transactions etc.

Firms don’t buy stock to lend as they won’t make any profits but some natural holders do to enhance returns. Some are vocal about not lending stock too.

Having said that I can only see demand for borrowing VRS shares from shorters or MMs in small quantities for settlement purposes. With 150m shares in issue it probably isn’t too hard to find a million to borrow if you’re prepared to pay a good rate.

ETF fund managers are the largest lenders as it’s easy money and their margins are wafer thin anyway. Any institution including platforms could lend shares but I suspect it’s too risky from a reputation perspective for the platforms.

Re SB - if you take a long position and there is no corresponding short position with another client, the SB will cover the position with a market purchase of stock and lend it out if possible for extra revenue.

[skyliteandy] 25/10/2018 20:18

A lesson for all Chimp, thanks for sharing.

[chimpandy1] 25/10/2018 20:02

When I first started trading in January I got over excited when the share price soon after climbed to 120. At that point I stuck a SB on VRS just to watch the share price drop down to the 60s and close me out. I learned a hard lesson that day, luckily I didn't gamble too much but it still hurt. Now I just keep thinking that if I had used that money to actually buy the shares then I would still have them now and I wouldn't have suffered the loss. I have kept away from spread betting ever since and have no intention of trying again.

[ellissj] 25/10/2018 19:54

Graphene mentioned in here re future aircraft tech. Best ellis

[skyliteandy] 25/10/2018 19:51

People spread bet or CFD because they're more of a gambler and greedy, end of. I'm with Fest on this, buy and hold long. That's what throws a spanner in the works of murky sods. Of course it may lose money but that's life, it's you and your shares; no-one else involved. Good luck all - free Butty Bach in the pub tonight. Does it get better than that?

[spike_1] 25/10/2018 19:48

re the 125,006 trades at 111.65 @ 08:32 and again 113.25 @ 14:50.

The number traded is well over market size so will have required a 'premium' at both ends.

Logic clearly suggests a buy at 08:32 and subsequent sale at 14.50.

It also suggests why we rise early on, then hit a 'wall'. Simply traders knowing there is a demand, and making use of it to make a few pounds.

Suffice to say, we are up today, and if the market continues to recover tomorrow, we will continue back up.

Best wishes - Spike

[jointer13] 25/10/2018 19:42

a little piece on shorting.

"murky practice"

imagine that you bought a new car from a showroom but then, over the next few years, the guy who sold you the car would pop down your road, borrow it without your knowledge and lend it to someone else for a fee? You wouldn't just be outraged. I think you'd call the police.
Yet this is precisely what's going on with your pensions and Isas. Fund management groups are making hundreds of millions of pounds in profit by "lending" the shares that you own in your fund, without asking you, and pocketing the fee they earn for doing so.
It gets worse. The people who they lend your shares to are, by and large, hedge fund managers. These hedge fund managers then use the borrowed stock to "short" the shares – in other words, make money by pushing the price down. So not only are your Isa or pension shares being lent to someone else without your knowledge, the transaction may force down the value of those shares.
SCM Private, a small fund management boutique, this week bravely blew the whistle on the secret profits other groups scoop from your fund by stock lending. It examined 20 funds, and found that 19 have made provisions to lend up to 100% of their clients' shares.
The fees earned are mouthwatering. It's estimated the business is worth around £850m; some of the profits go back to the client, but far from all. Guardian research found that BlackRock, for example, pockets 40% of the fees from stock lending for itself. Others, such as Fidelity, told me that while they lend stock they only take fees to covers costs, and that the profit goes into the fund to benefit investors.
Not all fund managers are up to it. Neptune, for example, has £6bn in funds that it could potentially lend, but thinks that doing so would be a fundamental conflict of interest.
The company's founder, Robin Geffen, told me: "When an investor gives you money, you buy the stock on the basis that you think it will go up. You don't lend it to someone who takes the opposite position to you."
Some argue that stock lending doesn't matter; if you are holding for the long term and can make some cash lending to a short-term hedge fund operator, what's not to like?
Quite a lot, says Geffen. August's dramatic volatility in markets may in some part be due to very thin trading. Funds that go aggressively short during thin trading can really move prices – to the cost of the long-only investor.
In the US, the Senate is investigating stock lending after some 401(k) plans (roughly equal to personal pensions here) that had lent out stock were frozen when Lehman Brothers went under.
Given the complex nature of financial markets, can we really be sure that despite "third party custodians", stock lending won't explode here one day? Time for regulators here to join the US in investigating this murky practice.

[f3rdinand] 25/10/2018 19:40

I think the 125k buyer is from China (an insider in Jinan province maybe) 1 add 2 add 5 equals 8...what number is lucky in China?

[ellissj] 25/10/2018 19:37

Electric plane here ! Best ellis

[luckyorange] 25/10/2018 19:30

Thanks bgt1, no shares involved on a spreadbet then and it is down to the providers appetite for risk.

[luckyorange] 25/10/2018 19:28

I don't think they can touch them if they are real shares superg, it would be an illegal theft of shares from a client account....

[loglorry1] 25/10/2018 19:27

Watching you lot try to work out how borrow works is hilarious.

What's funniest is why do you care? Why not focus on the things which will make you money?

SuperG's been saying there's 4M shares short desparate to close after NS stiffed them at 145p. He's just making it up. There's obviously nobody desparate to buy at 145p when the shareprice has been so far below for so long. Now he's suddenly become an expert at stock borrow.

[superg1] 25/10/2018 19:20

Lucky

Complete opposite of what I as told a few months back and I had a rant re not being able to opt out. Hence everything went into share accounts and IG as for trading bad news bounces. I’ve now dumped IG altogether, others plan to follow in time.

In any case some IG guys imo are as thick as thieves with them.

[bgt1] 25/10/2018 19:20

Spread bets are just bets placed on the price movement

[luckyorange] 25/10/2018 19:15

That was Chillpill matheus, I am guessing that he has a similar background to lovat.

[chimpandy1] 25/10/2018 19:15

Just been catching up on Neill's Twitter. Interesting that he mentions shorting shares that are not there for a second time now. Sounds like he knows of some dodgy naked shorting going on. This was in reply to someone asking if Neill's shares could be loaned. Neill Ricketts @neillricketts · 3h I have a certificate lodged with my solicitor, if they can get in there then we are all doomed. Interesting that they can actually borrow more shares than in circulation as has happened in a few cases.

[luckyorange] 25/10/2018 19:10

I think that about confirms that it is the spreadbetters who are the 'real' shareholders worst enemy, because , putting it quite simply, if you buy them as a s/b or CFD then you are also making them available to shorters.

I suppose the simple message is , if you don't want them shorted don't spreadbet, but that does beg the question i.e. how many shares do spreadbetting companies buy to loan out either way or are they in the ether? Lovat?

[bobsworth] 25/10/2018 19:09

Dow Jones up 400 points. That's better!

[matheus7777] 25/10/2018 19:06

Someone posted (can't remember who sorry) that China is less strict about insider trading. If that *is* the case then it might be that unusual buys might precede an RNS from China at some point, presumably with a surprise boost at opening due to time difference